The latest consumer price index indicates that prices continue to trend upward despite the economy's recent loss of momentum, and that as a result the Federal Reserve "is not out of the woods with respect to inflation," said Wachovia financial economist Gina Martin.

Fed policymakers meet Tuesday and Wednesday and are expected to leave their benchmark interest rate at 5.25 percent.

"This is not a very hopeful report if you were looking for a Fed rate cut," said Naroff Economic Advisors economist Joel Naroff.

The Bureau of Labor Statistics reports the consumer price index in two basic formats: The "headline" number shows the overall increase from the previous month, while the "core" reading strips out the volatile energy and food sectors.

The headline number of a 0.4 percent increase exceeded the 0.3 percent advance most experts had been forecasting. But that was because higher prices at the pump helped push energy costs up by a hefty 0.9 percent, while a weather-related jump in the price of fresh fruit and vegetables sent food products up a stronger-than-expected 0.8 percent.

The core reading, which is designed to show underlying price trends without the statistical static of ever-changing food and fuel costs, rose a more modest 0.2 percent, in line with forecasts.

Investors and economists routinely parse the data for clues about how much inflationary pressure is building up in the economy. Although the economy has slowed markedly since mid-2006, few observers expect the Fed to relax interest rates while the cost of labor, consumer goods and industrial input continues to move upward.

Friday's data, despite a solid upward move in the cost of housing rental expenses, showed signs of an easing in many categories.

The report "suggests that, outside of the cost of shelter, inflationary pressures are receding," said Economy.com's Per Gunnar Berglund. "The underlying inflation trend has stabilized, at least for the time being."

Over the 12 months ended in February, the consumer price index rose by 2.7 percent, a rate that is unchanged from the 12 months ended in January.

The Fed's "comfort zone" for inflation is considered to be between 1.5 percent and 2 percent.

"Core inflation is now broadly stable, but will decline over the course of this year as [economic] growth slows further," predicted economist Ian Shepherdson of High Frequency Economics.

The upshot of Friday's report, economists said, is that any hope for a rate reduction by the Fed appears to remain well in the future.

Separately, the Fed's statistical arm reported that production from the nation's factories, mines and utilities surged by a much-larger-than-expected 1 percent last month. The gain, the biggest jump since November 2005, was largely caused by a spike in utility output.

Because the upside surprise is largely traceable to harsh winter weather rather than any fundamental economic factor, Friday's industrial production report drew only moderate interest. The data helped confirm that "February was a respectable month for the economy," said Action Economics commentator Mike Englund, "aside from weather distortions that are plaguing many of the monthly reports."